SCHL, Sagen and Canada Guaranty: who are they and when do we need them?

SCHL, Sagen and Canada Guaranty: who they are and when we need them?

When you buy a property with a down payment of less than 20%, your loan becomes a insured mortgage. This is where the three mortgage insurers in Canada come into play:

SCHL, Sagen and Canada Guaranty.

1. SCHL (Canada Mortgage and Housing Corporation)

• Public insurer (federal), well known and widely used by banks.
• Allows buyers to purchase with only 5% down payment (depending on price and current rules).
• Offers several programs for first-time home buyers and for special situations.
• Its insurance premiums are added to your mortgage and paid over the term of the loan.

2. Sagen

• Private insurer, formerly Genworth Canada.
• Performs essentially the same role as SCHL: enabling clients to buy with less than 20% down.
• Some lenders prefer it for its underwriting flexibility in certain profiles (self-employed, variable incomes, etc.).
• Premiums are comparable to SCHL, with slight variations depending on the product.

3. Canada Guaranty

• Another private insurer present across Canada.
• Competes with SCHL and Sagen, which often gives lenders and borrowers more options.
• Known for certain niche programs (for example, support for first-time buyers or certain types of eligible properties).
• Basic rules remain aligned with federal standards.

When do we need these insurers?

You definitely need an insurer (SCHL, Sagen or Canada Guaranty) when:

• Your down payment is less than 20% for owner-occupied property;
• The loan-to-value ratio (LTV) is greater than 80%;
• The lender wants to reduce its risk in case of default.

In this case :

1. The lender usually chooses the insurer (you do not choose it yourself).
2. The premium is calculated as a percentage of the borrowed amount.
3. This premium is usually financed in the mortgage.

You do not need them when:

• You put 20% or more down on a standard property;
• Or the lender decides not to insure the loan (for example for certain refinances or particular properties).

And in Quebec?

In Quebec, the rules are the same as elsewhere in Canada:

• Under the federal guidelines, the three insurers operate similarly.
• The difference mainly lies in the lender’s internal policy (Desjardins, bank, caisse, etc.), which decides which insurer to use for your file.

In summary

• SCHL: public insurer, the most well-known.
• Sagen and Canada Guaranty: private insurers, competitors, offering very similar rules but with some flexibility nuances.
• We need them as soon as we buy with less than 20% down on an eligible property.

For your project, the important thing is mainly to structure your down payment and budget well; the insurer used will be chosen behind the scenes by your lender or your mortgage broker.